Foxconn, TECO Announce Strategic Alliance Targeting AI Data Center Capabilities

Estimated reading time: 1 minute

Hon Hai Technology Group (Foxconn) and TECO Electric & Machinery Co Ltd Ltd (TECO) on Wednesday announced a share exchange, strategic alliance that will strengthen their AI infrastructure capabilities and propel the two Taiwanese tech majors into key markets in the global super-computing race.

The move brings together the strengths of Foxconn, the world's largest electronics manufacturing service provider and AI server producer, and TECO, a leader in industrial electro-mechanical engineering and green energy innovation. Seizing on the development of global AI data center (AIDC) construction towards standardization and modularization, the two companies will jointly explore AIDC business opportunities. Global customers will be able to tap comprehensive data center modular products, electromechanical engineering services, and cost-competitive, one-stop solutions.

According to terms approved by both boards, respectively, TECO will take a 0.519% stake in Hon Hai Precision Industry Co Ltd, the formal name Foxconn trades on at the Taiwan Stock Exchange. In turn, Foxconn will own 10% in TECO. The latter will issue 237,644,068 new shares to Foxconn, and Foxconn will issue 72,481,441 new shares to TECO, implying a share exchange ratio of approx. 1 to 0.305. The no-cash transaction is targeted to complete in fourth quarter of this year, conditional on regulatory approvals.

Foxconn Chairman Young Liu said, "Time-to-market is key in the global super-computing race. Modular design is gaining popularity. As AI data centers grow in size and demand ramps higher, teaming up with TECO means both companies are able to level up and rapidly deliver comprehensive, vertically-integrated solutions to our customers – the Tier-1 CSPs and hyperscalers."

TECO Chairman Morris Li said, "Changing global dynamics are creating new opportunities for business and cooperation. The strategic partnership extends the two companies' cooperation in the fields of low-carbon smart factories and energy services, toward being a one-stop solution for data centers going forward."

Target markets cover Taiwan, Asia, the Middle East and the US. Texas-based TECO-Westinghouse, a world leader in making electric motors, with its US manufacturing and local services, together with Foxconn's US manufacturing base, are in line with the companies' strategic aim to expand US manufacturing and reshape the global supply chain.